Description

Collective Bargaining Background

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Background
In some industries a number of competing small businesses must bargain with big business. Individually, the small businesses may lack bargaining power and so may seek to join together and bargain collectively, thereby exercising a degree of countervailing power to that of big business. Collective bargaining at one level may lessen competition but, at another level, provided that the countervailing power is not excessive, it may be in the public interest to enable small business to negotiate more effectively with big business.
However, collective bargaining is constrained by the Act. Sectioná45 prohibits collusive conduct in the form of contracts, arrangements or understandings having the purpose or effect of substantially lessening competition. Sectioná45A(1), in effect, deems a price fixing agreement to be in breach of sectioná45. Accordingly, any agreement between competitors to fix, control or maintain prices for goods or services is prohibited regardless of its purpose or effect on competition. Sectionsá45A(2) and 45A(4) provide joint ventures and joint buying groups with a limited exception from the peráse prohibition imposed by sectioná45A(1), but sectioná45 continues to apply so that any pricing arrangements are still prohibited if they substantially lessen competition. Sectioná51(2)(a) exempts collective bargaining, for example by trade unions, in relation to remuneration, conditions of employment, hours of work or working conditions of employees.
Under sectionsá45 andá45A, collective bargaining might amount to a prohibited price fixing agreement. For example, a group of primary producers joining together to negotiate terms of sale for produce might be entering into a price fixing agreement in breach of sectioná45.
Sectioná45 also prohibits any contract, arrangement or understanding which contains an exclusionary provision. The aim of this provision is to prevent, inter alia, collective boycotts, which involve the deliberate exclusion of a person from participating in a market. An exclusionary provision is defined by sectioná4D as a provision of a contract, arrangement or understanding between at least two or more parties who are competitive with each other which prevents, limits or restricts the freedom of the parties to deal with certain persons or classes of persons.
A collective bargaining arrangement involving the possibility of a collective refusal to deal with a person or class of persons might amount to an arrangement to engage in a collective boycott and be an exclusionary provision.
Under sectionsá88 and 90, collective bargaining may be authorised by the ACCC where it is satisfied that the public benefit would outweigh the detriment constituted by any lessening of competition that would result or be likely to result. Authorisation takes a collective bargaining arrangement outside the provisions of sectionsá45 andá45A. The operation of the authorisation process is outlined in Chapter 6.
By way of contrast to authorisation, sectioná93 of the Act provides for the notification of exclusive dealing which, were ...